Stocks open lower Monday
Stocks opened lower Monday as the summer rally waned ahead of the Federal Reserve’s Jackson Hole symposium. The Dow Jones Industrial Average fell 376 points, or by 1.12%. S&P 500 and Nasdaq Composite dropped 1.29% and 1.42%, respectively.
VIX at highest level since Aug. 3
A measure of stock volatility called the VIX rose to its highest level since Aug. 3.
The Cboe Volatility Index climbed 2.6 points to 23.16 on Monday, though it is still off its recent high when it spiked above 30 in June.
Powell will be “meaningfully more hawkish” at Jackson Hole, Wolfe Research says
Federal Reserve Chairman Jerome Powell will likely take an aggressive stance against inflation in his Jackson Hole speech on Friday, according to Wolfe Research.
“We expect Powell to sound more hawkish at Jackson Hole,” Wolfe Research’s Chris Senyek wrote in the Monday note.
“As we’ve previously discussed at length, we believe that Fed would have to hike the fed funds rate to 4.5%+ to set inflation on a sustainable path back toward the FOMC’s long-term 2% target,” he added.
The research firm said the central bank is “behind the curve,” and outlined reasons why it’s not buying into the bull case, including slowing global growth and inflated earnings expectations.
AMC shares sink as Cineworld weighs filing for bankruptcy
Signify surges on Amazon report
Shares of Signify Health surged nearly 38% in Monday premarket trading following a Wall Street Journal report saying that Amazon is among several companies bidding for the healthcare company.
The tech giant, along with CVS Health and UnitedHealth Group, is competing in an auction that would value Signify at more than $8 billion, according to the report citing people familiar with the matter.
Amazon shares declined 2% in Monday premarket trading.
Buffett reportedly not going for full takeover of Occidental
Time to sell Netflix, CFRA says
Netflix has bounced sharply since mid-July, but the good times for the streaming stock won’t last long, according to CFRA.
Analyst Kenneth Leon downgraded Netflix to sell from hold, noting that: “The key catalyst for NFLX — introducing new ad-pay subscription plans — may not be visible until 2023.”
Netflix shares fell 2% in the premarket.
CNBC Pro subscribers can read the full story here.
—Fred Imbert, Carmen Reinicke
Euro slips back to dollar parity
The euro briefly slipped below parity with the US dollar on Monday for the first time since mid-July, as euro zone recession fears resurfaced.
As of 9:15 am London time, the common currency had recovered fractionally and was trading at exactly $1.
European markets fall as rate hike fears resurface
European markets retreated on Monday as fears of more aggressive interest rate hikes from the Federal Reserve and the European Central Bank returned to the fore.
The pan-European Stoxx 600 slipped 1.2% by mid-morning in London, with autos falling 2.9% to lead losses as all sectors and major Bourses traded in negative territory.
Risk sentiment was dampened by hawkish signals from ECB policymakers, with Bundesbank President Joachim Nagel telling a German newspaper that the ECB must continue hiking interest rates even as recession risks in Germany grow.
Minutes from the ECB’s most recent policy meeting will be published Thursday, while investors will be paying close attention to euro zone flash PMIs due on Tuesday.
China’s central bank cuts benchmark lending rates
The People’s Bank of China cut its one-year benchmark lending rate by 5 basis points and its five-year rate by 15 basis points, according to an online statement.
That brings the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.
Analysts polled by Reuters expected a 10-basis-point cut to the one-year LPR, and half of the survey respondents expected the five-year rate to be lowered by 15 basis points.
CNBC Pro: How to reduce risk in your portfolio right now, according to the pros
Stocks have been volatile this year, as a mix of recession fears, inflationary pressure and other macro risks roil markets.
Here are three ways that investors can adjust their portfolios to lower their risks or mitigate losses, according to Goldman Sachs, Wells Fargo and others.
Pro subscribers can read more here.
CNBC Pro: JPMorgan predicts when the rally in growth stocks will end
Investors have flocked to growth stocks of late, but as recession fears mount, market watchers are deciding whether to rotate into safer bets instead.
JPMorgan, however, thinks the rally still has further to go, and named several indicators to watch for when considering a rotation out of growth stocks.
Pro subscribers can read the story here.
— Zavier Ong
Earnings season wrapping up
Investors are wrapping up earnings season with just a couple dozen companies in the S&P 500 yet to go. Of the 95% of companies in the broader market index that have reported earnings, roughly 75% have beat expectations, according to FactSet.
What to expect from Powell’s Jackson Hole speech
Fed Chairman Jerome Powell is expected to speak at the central bank’s annual symposium in Jackson Hole, Wyoming this week, and shed some light on the pace of future interest rate hikes.
Powell may advance hawkish comments from Fed officials who recently underscored their commitment to fighting inflation, even as investors enjoyed a summer rally partly on expectations of a less aggressive Fed.
Still, St. Louis Fed President James Bullard said in an interview last week with the Wall Street Journal that he is considering another 0.75 percentage point interest rate hike at the September meeting.
Check out CNBC Pro for more on what to expect from the Fed chair.
Futures open lower
Futures opened lower Sunday night. Dow Jones Industrial Average futures fell by 94 points, or 0.28%. S&P 500 and Nasdaq 100 futures dipped 0.36% and 0.69%, respectively.